I've tested quite a few digital cameras and have read countless reviews....(which is what you should do...but I'll spare you the time)
Listen to what Coop says....only thing I'll add is that the "breaker point" seems to be at 4 MegaPixels. Almost all the cameras above 4 MP will have the features you want to take good knife pics. Most of the cameras below 4 MP will lack seriously in features, and the construction won't be as good, etc.
I've used my digicam in "Full-Auto" point-n-shoot mode with great results. It's not as good as a Canon 10D in full auto, but much better than a 3MP point-n-shoot. Point being, you can take good knife pics with a point-n-shoot as long as it's a good one (over 4 MP, IMHO).
Here's what I would do:
1 - go to a local camera outfitter. Pick up and play around with any and all cameras 4 MP and above. Try to find one that "fits you". Isn't too small...nor too large. Has lots of features....not too complicated.
2 - decide what kind of batteries you want to use. I will only use rechargable AA - that limits my choices. If you don't know anything about batteries...skip this step. Otherwise, do some thinking about it...
3 - Narrow it down to 3-5 choices that are still within your budget. (should be at least $250 - $400) Stick with the major brand names: Canon, Nikon, Sony, Olympus, Kodak, etc...
4 - Go to
www.depreview.com and read the reviews for each of your choices. Try to narrow it down to 2. Go to the individual forums (on dpreview) and read what people have to say about it. Pay attention to the complaints. There is a lot of "my camera is the best" talk there....so try not to get too swayed by it.
5 - Go back to the store to confirm your final choice.
You can sometimes get a good deal online on a new one through ebay, etc. There are also certain online shops that are better than others...so come back here and let us know before you buy online - if the price is too good to be true, it usually is.
Otherwise, support the local camera outfitter, who will be more likely/willing to do any warranty/repair work on it later (if ever needed).